Everyone in business has heard the expression that if you’re not disrupting your market, someone else will soon be disrupting you. But this raw challenge doesn’t help most leaders understand how they’re supposed to get started in the creative-destruction business.

But Steven Stein has figured it out. The chief executive officer of Toronto-based Multi-Health Systems Inc. has created an in-house “hackathon” to encourage innovative thinking and transform ideas into new products.

Stein is a true believer in creative destruction. He founded MHS 33 years ago to disrupt the psychological-testing industry by automating conventional paper-based tests for the personal computer. Today, MHS is a global industry leader, with 160 employees and clients in more than 75 countries. But Stein knows his company remains vulnerable to new entrepreneurs with better ideas – so he’s shaking up his team to ensure they develop those bold new products first.

It was an off-site strategy session for senior leaders that launched MHS’s innovation project. “Two years back, we had a presentation on disruption,” Stein said. “We went home and had nightmares about how new people could kick us out of the market.”

Stein and his team knew hackathons were popular, if sometimes messy, events that help small teams turn new ideas into working prototypes fast. Even when they don’t produce new products, hackathons can be powerful problem-solving exercises that can build positive attributes such as agility, risk tolerance and trust. So Stein appointed a team, led by president Hazel Wheldon, in the summer of 2015 to put MHS on the hackathon circuit – and make it fun and engaging.

Since then, MHS has held two hackathons at its Toronto headquarters, and created a five-person “innovation hub” to select the best ideas and turn them into customer-ready products. Innovation is a long game, and the first market tests are still in the field. But Stein believes the process has already been successful. “The biggest benefit is the excitement it created,” he said. “People loved working with new people. It’s been worth it just for the engagement, not just the products we got out of it.”

Could your company pull off a similar innovation coup? Here’s how MHS did it.

After researching how other companies managed innovation events, MHS’s hackathon planners developed guidelines and rules. They decided on a one-day hackathon on a January Monday – with the 15 teams competing in a “Demo Day” the following Friday, in conjunction with MHS’s annual awards dinner.

Teams formed in groups of five to eight in early fall, so they would have lots of time to develop ideas and research solutions prior to the big day. To help the teams focus, planners identified four sectors as most likely to be disrupted: big data; mobile apps; gamification; and process improvement.

As the employee teams took shape (each one restricted to one programmer and one employee from user experience), the planners scheduled a series of “lunch and learns” through the fall. Topics included creating prototypes, writing business plans and making killer presentations.

The incentives? The team with the most promising idea (as judged by Stein and a panel of internal and external judges) would win $5,000. There would also be a $2,000 second prize, and a third prize of $1,000.

On hackathon day in January, 2016, the 15 teams had until 6 p.m. to finalize a prototype and hammer out a business plan. MHS supplied food and colour-coded team T-shirts, creating a festive atmosphere. Participants were laughing, sweating, debating and tweeting – so much so that competitors started noticing. For 2017, MHS had to say no to tweets that gave too much away.

All teams presented to the judging panel on the following Friday. Each team was allowed a five-minute presentation, followed by five minutes for answering questions. Stein was thrilled by the winning ideas: an inexpensive “candidate competencies” test for employers to help MHS hack its way into a highly lucrative market; a mobile “early warning” solution that let psychologists share with patients (or their parents) preliminary test results in minutes instead of weeks; and the identification of new markets for some of the firm’s underused mental-health surveys through sales to the insurance industry.

Stein said some of these ideas might have daunted the team prior to the hackathon. “But now these guys have mapped them out. They said: ‘We can do it. Here’s how.’ ”

The next step was for the implementation team to review the finalists’ ideas and adopt the most promising projects. For now, MHS is funding this project through unbudgeted foreign-exchange gains; Stein hopes the group will start paying its way before the Canadian dollar turns up again.

The innovation hub – two psychologists, two programmers and a UX person – fine-tuned initial prototypes for hand-off to sales, which arranged pilot programs with real customers. The team set itself quarterly goals to ensure it was doing its job; in innovation, knowing what to stop working on is just as important as spotting winners.

“Over all, there are eight or nine projects we’re moving ahead with,” Stein said. With two hackathons now under his belt, a pipeline of new projects and a re-engaged work force, he said the whole process has been a winner. “It’s turned us from a disruptee to a disruptor.”

Ken Tencer is chief executive officer of design-driven strategy firmSpyder Works Inc.and the co-author of two books on innovation, including the bestsellerCause a Disturbance.He holds the Institute of Corporate Directors certification (ICD.D).Follow him on Twitter at@90percentRule.

One of the biggest risks in the economy is the fumbled hand-off of family businesses from one generation to the next. The expession “shirtsleeves to shirtsleeves in three generations” sums this up nicely: the first generation builds a successful business, the second generation carries on in a diminished way, and the third generation inherits a mess and then starts over again.

Imagine the benefits to the Canadian economy if we could improve the success rate of family-business succession. Important companies and capital pools could be preserved, jobs maintained, and successful business practices and innovations shared for the future.

Better planning, documentation and family communication are among the usual remedies prescribed to relieve the succession crisis. But none address the real problem. As the patriarch of one business family once said to me, “The hardest part is figuring out whether your children are worthy or capable of following in your business footsteps.” Meanwhile, his children had different thoughts: “Your footsteps are no longer heading in the right direction. Thanks for the years of building your legacy, but please take a back seat.”

Internships and family councils won’t bridge this generation gap.

But now a Montreal foundation has come up with an innovative new approach to help business families come together. And non-family business owners find this a model for relieving their own growth and succession bottlenecks.

Olivier de Richoufftz is president of the Business Families Foundation, set up by Philippe de Gaspé Beaubien, the former CEO of Telemedia, and his wife and business partner, Nan-b. Twenty-six years ago, after wrestling with finding the best way to hand their business empire to their three children, Phillipe and Nan-b formed the foundation to help other business families manage this problem.

Mr. de Richoufftz defines the problem this way: The parents running a business tend to assume their children will take over some day, but they rarely communicate their intentions until too late. Families rarely discuss who wants to do what in the family business. But even if successors and leaders are identified, problems remain:

When and how will the senior generation give up power?

With equal numbers of shares, how will the next generation work together?

How will they resolve disputes?

How do family-owned businesses hire and retain talented senior employees if they know the kids are going to come along and supplant them, or at the very least shake things up?

The foundation’s new approach, which is now being workshopped by a dozen business families in Quebec, addresses all these problems. It does so by changing the basic assumptions behind family succession. Instead of seeing the founders’ children as the inheritors and future executives of mom and dad’s business, this approach encourages them to become entrepreneurs – but with internal advantages. “We are turning business families into intrapreneurial families,” says Mr. de Richoufftz.

He says children in a business family should see themselves as intrapreneurs. That is, they should look for new business opportunities that would fit their skills and interests – and then tap the resources of the family business to help them start stronger and grow faster than the average independent business. (This brings new meaning to the phrase “mother ship.”)

The foundation’s 100-day Intrapreneur Program, co-sponsored by Quebec’s Caisse de dépôt, works like a business incubator. Its first cohort, which began in September, includes 15 intrapreneurial projects, each team including one or two intrapreneurs as well as a business mentor, or parrain, to hone their plan and help figure out the best way to work with the family business. “Instead of startups, our aim is to create spinoffs,” says Mr. de Richoufftz. “The family business is not here to give you a cheque, but to support your dream. After 100 days you’ll know if you’re qualified for this.”

The program brings participants together every two weeks for seminars, lectures and candid conversations on business plans and family dynamics. The intrapreneurs conclude the program by making a formal business presentation to their parents or first-generation business leaders, identifying the opportunity they see, and the resources (e.g. capital, facilities, or HR expertise) they wish to tap into from the family business. Mom and dad can push back, ask questions, or negotiate the family’s involvement in the new venture.

Result: the second-generation leaders access business experience and resources without disrupting the family business. Brothers and sisters can pursue their personal ambitions without getting in each others’ way.

Mr. de Richoufftz notes that some of these new “interprises” may become “way larger” than the primary business: “In some cases, we see the intrapreneur taking over the core company.” But such cases would see the intrapreneur as an experienced business leader moving in with a proven business model – not just a young amateur with kooky ideas. Such successful entrepreneurs would be better able to buy their parents’ businesses than they might have been as employees, thereby solving the financial-succession problem that often leashes together siblings who would rather not work together. “Only strong families build strong businesses,” says Mr. de Richoufftz.

The Business Families Foundation plans to launch a second cohort in February, and hopes to include family companies from Toronto and Vancouver. (The cost is expected to be $8,000 per venture.) Mr. de Richoufftz wants to take the program national, and then global: “We are looking at partners to help us scale it up.”

I am excited about this new model for improving the success of family business. But I’m also keen on the implication for other companies. Every business has trouble retaining great employees, especially senior people with high potential and great ideas. Why shouldn’t those employers find new ways to work with these people? By offering resources or even capital, business owners could stay linked with these employees, and share in their future growth, and learn from their success.

There’s nothing more faddish than some of the terms used when devising corporate strategy, and now, for better or worse, “intrapreneurship” is back.

Born in the late 1970s, when sudden market shifts first started to demonstrate that the average corporate entity isn’t actually good at adapting to change, intrapreneurship is a movement that believes big businesses should grow and innovate the way entrepreneurs do. The first wave of intrapreneurship never really took off, probably for two reasons: a) because innovation is hard, and b) because most big corporate leaders didn’t truly believe they could learn anything from small businesses.

But now intrapreneurship is hot again. Unlike the 1980s, the impact of entrepreneurial disruption is all around us: in the urban uproars over Uber, the fuss around fintech, and Detroit’s growing attention to Elon Musk and his electric cars. CEOs have to respect small business now, because visionary, nimble entrepreneurs are kicking them in the assets.

Check any business magazine today, and you’ll see evidence of this shift. The business models everyone is copying are those of Etsy, Zappos, Airbnb, Warby Parker and other creative, mission-based innovators. No one wants to be the McDonald’s of their industry (low quality, cheapest) any more. Not even McDonald’s.

What caused this comeback? “The potential of intrapreneurship is greater than ever,” says Hans Balmaekers, program and partnership chief with the Netherlands-based Intrapreneurship Conference. “The business landscape has changed. Consumers are more choosey today, and startups are better able to meet that demand. Intrapreneurship is an opportunity to do more experiments, faster and cheaper.”

Mr. Balmaekers says intrapreneurship borrows the best qualities of savvy startups: a bias for change, openness to learning and collaborating, a commitment to customer feedback, and tolerance for risk.

This month the Intrapreneurship Conference will hold its first two Canadian events – in Waterloo, Ont., on June 14, and Montreal on June 16. (In the interests of full disclosure, I have been invited to speak at the Montreal conference.)

Most intrapreneurship programs are still small-scale. They tend to be championed by just one senior executive in an organization, and confined to one group that’s specially empowered to test new ideas and fail fast. Mr. Balmaekers says it will take most early adopters years to extend that kind of thinking throughout their organizations.

Intrapreneurship starts with humility, which in big firms is rarely a core competence. “At our conferences, no one hides behind their business cards,” says Mr. Balmaeker. “It’s not about competing and showing off, but collaborating and learning together.”

When I first heard about the Intrapreneurship Conference, I must admit I wavered for a moment. Is intrapreneurship actually good for entrepreneurs? Do we really want market-dominating, resource-rich corporations taking our best stuff: our entrepreneurial hunger for disruption, our ability to turn on a dime, our commitment to constantly surprise and delight our customers? When our only advantage is agility, do we really want corporations to learn how to dance?

In the end, I concluded, the answer is yes. Of course we want smarter, savvier corporates making waves in their marketplaces. Small business won’t just benefit from the competition; we will all gain from faster-moving and more risk-tolerant markets.

Here’s why:

Entrepreneurs exist to spot gaps and seize opportunities. As bigger organizations embrace change and disruption, they will naturally become more open to doing deals with fearless, creative, small businesses. If big companies start attracting and empowering more innovative executives, they give us more willing prospects to pitch to and partner with. Having people at the top of big businesses who actually have budgets for new ideas, projects and processes will be a huge opportunity for visionary entrepreneurs.

Many ideas never get to market because of lack of funding. Creating more intrapreneurial organizations doesn’t just generate more prospects for small business, but also more potential strategic partners and investors. Many brilliant but cash-constrained entrepreneurs would gladly swap ownership of an idea for stock options (or employment) in innovative large company, if it means seeing their vision realized.

“Build to sell” is the mantra of many entrepreneurs. The more that large companies understand and appreciate the value that smaller independents bring to their markets, the more they will be open to buying early-stage ventures.

Innovation is increasingly being recognized as a key differentiator, economic driver and source of job creation. If bigger businesses become better at innovation, they will create a more robust and competitive Canadian economy – which is good for every business, small or large.

Entrepreneurs should do everything they can to help their more corporate-minded colleagues adopt the culture of intrapreneurship. It may take years, and many setbacks. Corporate CEOs tend to be risk-averse, status-conscious, and in office for a very short time. They’ll need all the help they can get.